US tech economy suffering because of paranoia

The US economy is officially suffering because its government is not reigning in its paranoid security services.

One of the world’s biggest markets, China, has said that it is no longer using high-profile US technology brands for state buys, amid ongoing revelations about mass surveillance and hacking by the US government.

That means that key brands, including Cisco, Intel, Apple and McAfee — among others — have been dropped from the Chinese government’s list of authorised brands.

The number of approved foreign technology brands fell by a third, based on an analysis of the procurement list. Less than half of those companies with security products remain on the list.

Chinese companies were said to offer “more product guarantees” than overseas rivals. Some claim it has cost the US government many billions of dollars figure on the impact of the leaks.

US companies have been moaning that the activities by the NSA are harming their businesses in crucial growth markets, including China. However, the US government has claimed that its aggressive spying plan meant that Americans were safer and spying on everyone was the only way to catch terrorists.

This included backdoors being placed in US products sold overseas. Those revelations sparked a change in Chinese policy by forcing Western technology companies to hand over their source code for inspection. That led to an outcry in the capital by politicians who accused Chinese companies of doing exactly the same thing, when they hadn’t.

Microsoft said its fourth-quarter earnings that China “fell short” of its expectations, which chief executive Satya Nadella described as a “set of geopolitical issues” that the company was working through.

HP said its fiscal first-quarter earnings had “execution issues” in China thanks to the “tough market” with increasing competition from the local vendors approved by the Chinese government.

However Cisco has been suffering the most. Earlier this month at its fiscal second-quarter earnings, the networking giant said it lost 19 percent of its revenue in China, amid claims the NSA was installing backdoors and implants on its routers in transit.